Comments on Fed Watch: On The Disruptiveness of the Platinum Coin TypePad2013-01-12T22:16:24ZMark Thomahttp://economistsview.typepad.com/economistsview/tag:typepad.com,2003:http://economistsview.typepad.com/economistsview/2013/01/fed-watch-on-the-disruptiveness-of-the-platinum-coin/comments/atom.xml/EricT commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee764cd47970d2013-01-14T17:45:36Z2013-01-14T17:51:38ZEricTYou are aware of the performance of the Tea Party Congress, aren't you?<p>You are aware of the performance of the Tea Party Congress, aren&#39;t you?</p>John M commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fe37dec970c2013-01-14T01:08:21Z2013-01-29T00:58:55ZJohn Mhttp://profile.typepad.com/johnm307As I think of it, "If you reject attempts to bring out the best in you, you bring out the...<p>As I think of it, &quot;If you reject attempts to bring out the best in you, you bring out the worst in us.&quot; To be said to a conservative.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fe07b8c970c2013-01-13T19:30:40Z2013-01-13T19:30:40ZMinCourt is not the test, impeachment is.<p>Court is not the test, impeachment is.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fe078b2970c2013-01-13T19:29:25Z2013-01-13T19:29:25ZMinYes, humans are social animals, and it is a mistake to think that they do not care about the well...<p>Yes, humans are social animals, and it is a mistake to think that they do not care about the well being of other humans. People do care, both in wishing their fellows well, and in wishing themselves to be better off than others.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fe070c5970c2013-01-13T19:26:19Z2013-01-13T19:26:19ZMinI agree that the Congress -- not this Congress, OC --, should replace the debt ceiling with rules or guidelines...<p>I agree that the Congress -- not this Congress, OC --, should replace the debt ceiling with rules or guidelines for borrowing and printing currency. E. g., the Treasury should borrow in order to meet projected deficit spending for the next month, except when unemployment is greater than 7%, in which case it should print currency to do so. </p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35b1729d970b2013-01-13T19:20:59Z2013-01-13T19:20:59ZMin" I see nothing wrong with issuing money when at the zero bound and debt when above it." Or maybe...<p>&quot; I see nothing wrong with issuing money when at the zero bound and debt when above it.&quot;</p>
<p>Or maybe issuing currency when unemployment is high. (The Fed neglects unemployment.)</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee754b77b970d2013-01-13T19:16:51Z2013-01-13T19:16:51ZMinThere you go! :)<p>There you go! :)</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35b1551e970b2013-01-13T19:08:45Z2013-01-13T19:08:45ZMinLate on Sunday mornings, in the distance you can hear the bells of the Cantillon. Just beautiful! (Sorry. ;))<p>Late on Sunday mornings, in the distance you can hear the bells of the Cantillon. Just beautiful!</p>
<p>(Sorry. ;))</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee7549db0970d2013-01-13T19:06:30Z2013-01-13T19:06:30ZMinJimmie crack corn, and I don't care. :)<p>Jimmie crack corn, and I don&#39;t care. :)</p>Mark A. Sadowski commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee7545258970d2013-01-13T18:34:56Z2013-01-13T18:34:56ZMark A. Sadowskihttp://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=1380&chapter=64321&layout=html&Itemid=27 "...The only plan that can preserve the currency is one that will make it the immediate interest of the...<p><a href="http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=1380&chapter=64321&layout=html&Itemid=27" rel="nofollow">http://oll.libertyfund.org/?option=com_staticxt&amp;staticfile=show.php%3Ftitle=1380&amp;chapter=64321&amp;layout=html&amp;Itemid=27</a></p>
<p>&quot;...The only plan that can preserve the currency is one that will make it the immediate interest of the moneyed men to co-operate with government in its support. The country is in the same predicament in which France was previous to the famous Mississippi scheme, projected by Mr. Law. Its paper money, like ours, had dwindled to nothing; and no efforts of the government could revive it, because the people had lost all confidence in its ability. Mr. Law, who had much more penetration than integrity, readily perceived that no plan could succeed which did not unite the interest and credit of rich individuals with those of the state; and upon this he framed the idea of his project, which, so far, agreed in principle with the Bank of England. The foundation was good, but the superstructure too vast. The proprietors aimed at unlimited wealth, and the government itself expected too much; which was the cause of the ultimate miscarriage of the scheme, and of all the mischiefs that befell the kingdom in consequence....&quot;</p>
<p>Alexander Hamilton to Robert Morris, 1780</p>Mark A. Sadowski commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fdfcd2b970c2013-01-13T18:19:32Z2013-01-13T18:19:32ZMark A. Sadowski1) The platinum coin was a means to enable the executive branch to get around the House's drive towards fiscal...<p>1) The platinum coin was a means to enable the executive branch to get around the House&#39;s drive towards fiscal austerity. Do you really consider the executive branch more democratic in concept than the House? </p>
<p>2) Doesn&#39;t the executive, coupled with the Senate, already have control over who occupies the Board of Governors of the Federal Reserve? Or would you rather have Ron Paul in charge of monetary policy?</p>
<p>3) How is swapping a platinum coin for cash not fundamentally swapping &quot;financial assets?&quot; You don&#39;t seriously believe in Cantillon Effects do you?</p>
<p><a href="http://uneasymoney.com/2012/12/06/those-dreaded-cantillon-effects/" rel="nofollow">http://uneasymoney.com/2012/12/06/those-dreaded-cantillon-effects/</a> </p>dick c commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee7541703970d2013-01-13T18:08:50Z2013-01-13T18:08:50Zdick c"how it would turn out if the Republicans tested that decision in the Courts" I read somewhere, "Money, like murder,...<p>&quot;how it would turn out if the Republicans tested that decision in the Courts&quot;<br />
I read somewhere, &quot;Money, like murder, cannot be undone.&quot;</p>dick c commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35b08c68970b2013-01-13T17:39:41Z2013-01-13T17:39:41Zdick cI know very little about all this, but I read it as as a possible substitute, for just an interval,...<p>I know very little about all this, but I read it as as a possible substitute, for just an interval, rather than a conjoining.</p>Fred C. Dobbs commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35b05fae970b2013-01-13T17:19:18Z2013-01-13T17:19:18ZFred C. DobbsWho would have guessed that progressives can be so cynical?<p>Who would have guessed that<br />
progressives can be so cynical?</p>Larry commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee753794d970d2013-01-13T16:50:47Z2013-01-13T16:50:47ZLarryYes, it is important to prefix basically every sentence in the piece with "at the zero bound". We are there...<p>Yes, it is important to prefix basically every sentence in the piece with &quot;at the zero bound&quot;. We are there and show no sign of leaving there, but it would blow my mind if we never did.</p>
<p>And once we did, the debt/currency split becomes salient for inflation. I.e., we might need very high rates to control it.</p>
<p>Also, the coin engages the expectations channel in a destabilizing way. I.e., if we did it once, we might do it again. And while the move might be harmless now, in other circumstances it might not be, because there are neither de jure or de facto constraints on the practice.</p>rjs commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35afecbc970b2013-01-13T16:08:18Z2013-01-14T20:40:50Zrjshttp://profile.typepad.com/rjsigmundit would also expose the ruse perpetrated by most economists that government spending in a fiat currency is somehow limited...<p>it would also expose the ruse perpetrated by most economists that government spending in a fiat currency is somehow limited by the amount of taxes it collects or the amount of debt outstanding…</p>Jesse commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fde99b9970c2013-01-13T15:34:08Z2013-01-13T15:34:08ZJesseThe platinum coin was a non-starter, a politcally dumb idea, that appealed to some economic propeller heads. When he came...<p><br />
The platinum coin was a non-starter, a politcally dumb idea, that appealed to some economic propeller heads.</p>
<p>When he came out for it, I said that this was why Krugman could not be Treasury Secretary.</p>
<p>If you look past the technicalities, and think what it would really mean, and how it would turn out if the Republicans tested that decision in the Courts, and how silly they could make the President look, it becomes obvious.</p>
<p>But this is the silly season. Except even some Very Serious People are getting caught up in the nonsense.</p>
<p>There are other ways to resolve the impasse and the hostage taking that are fairly obvious if you think about it a little deeper than monetary magic.</p>Peter K. commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee752fabe970d2013-01-13T15:30:22Z2013-01-13T15:30:22ZPeter K.http://www.negativeoutlook.blogspot.com"Obama sees himself as a heroic deficit cutter and budget warrior." Which is why he nominated Jack Lew???<p>&quot;Obama sees himself as a heroic deficit cutter and budget warrior.&quot;</p>
<p>Which is why he nominated Jack Lew???</p>Peter K. commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fde902b970c2013-01-13T15:27:33Z2013-01-13T15:27:33ZPeter K.http://www.negativeoutlook.blogspot.comMust have been quite the golden age for the white men who owned property.<p>Must have been quite the golden age for the white men who owned property.</p>Left Coast Bernard commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee7522723970d2013-01-13T13:22:15Z2013-01-13T13:22:15ZLeft Coast BernardWhat is the law that requires that the government borrow money equal to the difference between what it takes in...<p>What is the law that requires that the government borrow money equal to the difference between what it takes in as taxes and what Congress has required it to spend?</p>
<p>If Congress refuses to allow the government to borrow more money, then the President should follow that law and not borrow any more money. He is, however, required to continue spending money by law, so he should do so.</p>
<p>The platinum coin shows that the federal government can spend whatever money it wishes, and it doesn&#39;t have to get the money through tax revenues or borrowing.</p>
<p>We knew this already because Uncle Sam issues his own currency and can do so in any amount.</p>Procopius commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fddb8cc970c2013-01-13T13:16:06Z2013-01-13T13:16:06ZProcopiusI think the problem is that wealth is comparative. The elite want to maximize their share of goods and services....<p>I think the problem is that wealth is comparative. The elite want to maximize their share of goods and services. Note I did not say they want to maximize goods and services. The problem with economists&#39; assumption of rational expectations is they think they know what is rational. I&#39;m saying that the elite would be happier if they get 90% of 500,000 than if they get 70% of one million. I think most economists would say that is irrational, but if you read (and believe) Thorstein Veblen&#39;s Theory of the Leisure Class you can see that they are most interested in displaying their gains from &quot;exploits,&quot; means that are denied to the lower classes (just as your average college grad will never be allowed into the mutually supporting networks of the establishment). They may have a bigger slice of a smaller pie, but what is important to them is that they are that much superior to the inferior classes.</p>Procopius commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aec6a1970b2013-01-13T13:08:01Z2013-01-13T13:08:01ZProcopiusDidn't Alexander Hamilton explain that in a letter to Robert Morris? The reason for issuing debt was to get the...<p>Didn&#39;t Alexander Hamilton explain that in a letter to Robert Morris? The reason for issuing debt was to get the rich people on the side of the new government. Wish I had a link to that letter.</p>bakho commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee751f759970d2013-01-13T12:51:50Z2013-01-13T12:51:50ZbakhoThe US has a deficit because our wealthy elites have been and are unwilling to make a fair contribution to...<p>The US has a deficit because our wealthy elites have been and are unwilling to make a fair contribution to maintaining our economy. They demand perks and low tax rates for themselves. The deficit occurs because the wealthy are unwilling to give up a demand on future goods and services. So we &quot;borrow&quot; money from the wealthy and pay them interest in the form of bonds rather than simply collecting their fair share as revenue. </p>
<p>Distribution of wealth is always political. The wealthy use their wealth against the rest of society in a class war to continue their unfair claims. We cannot have policies that are more fair and better for the majority in our society unless the wealthy special interests are politically defeated. Any discussion of what is good policy needs to also consider that enacting good policy requires the defeat of special interest policy. We are all participants in a bitter class war. Those who want to remain impartial on the sidelines merely enable the wealthy special interests to trash their good ideas and win the war.</p>Lord commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fda8128970c2013-01-13T05:59:18Z2013-01-13T05:59:18ZLordWhy is it everyone has to resort to reductio ad absurdum arguments? Yes, relying entirely on seigniorage makes the system...<p>Why is it everyone has to resort to reductio ad absurdum arguments? Yes, relying entirely on seigniorage makes the system extremely volatile, but relying entirely on debt makes the system volatile as well. I see nothing wrong with issuing money when at the zero bound and debt when above it. It may be so effective in fact that we won&#39;t even hit the zero bound in the future. But we must always avoid doing anything that could possibly succeed as it would upset our entrenched overlords. </p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35ab9215970b2013-01-13T05:51:09Z2013-01-13T05:51:09ZMinExactly. The purpose of the statement, from the administration's point of view, is to provide cover for Obama to cut...<p>Exactly. The purpose of the statement, from the administration&#39;s point of view, is to provide cover for Obama to cut social programs. The Fed may just be protecting its turf.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74ed5ca970d2013-01-13T05:49:16Z2013-01-13T05:49:16ZMinActually, what they said is that the coin cannot and should not be used to **avoid raising the debt limit.**...<p>Actually, what they said is that the coin cannot and should not be used to **avoid raising the debt limit.** They did not say that it could not and should not be used if the debt limit is not raised. That is a fine point, which I suspect that they intended to be misinterpreted.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74ed0da970d2013-01-13T05:46:02Z2013-01-13T05:46:02ZMin"If the intent was to maximise goods and services" That's not what bakho said. He said this: "They simply want...<p>&quot;If the intent was to maximise goods and services&quot;</p>
<p>That&#39;s not what bakho said. He said this: &quot;They simply want to maximize their **share** of the claims on future goods and services.&quot; (emphasis mine).</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fda6690970c2013-01-13T05:41:54Z2013-01-13T05:41:54ZMinA ceiling on either debt or currency is not a good idea. There is no reason for the gov't to...<p>A ceiling on either debt or currency is not a good idea. There is no reason for the gov&#39;t to give up either borrowing or &quot;printing&quot; money.</p>Amil commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35ab19bd970b2013-01-13T04:45:20Z2013-01-13T04:45:20ZAmil"If you follow Ip's analysis through to its logical conclusion, then why should the Treasury issue debt at all?" Darn...<p>&quot;If you follow Ip&#39;s analysis through to its logical conclusion, then why should the Treasury issue debt at all?&quot;</p>
<p>Darn fine question!</p>
<p>Actually, though, while Ip is clearly correct that the Fed can control interest rates without debt issuance (by using a support rate on reserves, as it is doing now), it&#39;s not so clear that jacking up interest rates is the best way to control inflation.</p>
<p>But, be that as it may, yes: If nothing else the platinum coin episode seems to be helping at least some people realize that there is no difference in macroeconomic impact between deficits &quot;financed&quot; by &quot;money printing&quot; and those &quot;financed&quot; by debt issuance--apart from the fact that the latter allow the central bank to set a positive rate of interest by means of open market operations rather than direct interest rate price setting.</p>Justin Cidertrades commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa9dfe970b2013-01-13T03:23:50Z2013-01-13T03:23:50ZJustin Cidertrades" threat that could not be endured by Washington. This realization hit me this morning, working on my last piece....<p><br />
&quot;<br />
threat that could not be endured by Washington.</p>
<p>This realization hit me this morning, working on my last piece. Begin with the effectiveness of monetary policy at the zero bound. Or, more accurately, the lack of effectiveness as the Federal Reserve is swapping one zero-interest asset<br />
&quot;</p>
<p>Voila!</p>
<p>Σος Στα!</p>
<p>QEx is a mere parlour trick. Take you eyes off the rabbit thus think that there is a rabbit. But the rodent is merely an illusion for the purpose of modifying expectations of inflation-s. The ultimate form of jawbone-ing is to make the audience believe that there is a material component to the virtual jawbone. The ultimate placebo for exorcising unsustainable private debt must become the treatment of choice when the conversion of private debt into public debt only makes matters worse. Make the *un-wealth-effect* of debt simply vanish from the minds of the economic animal.</p>
<p>Abre cada abre!</p>
<p>Fed governors are not quantum mechanics but merely magicians or/&amp; actors posing as magicians.</p>
<p>Well bless my brass buttons<br />
!<br />
</p>DrDick commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa9671970b2013-01-13T03:17:13Z2013-01-13T03:17:13ZDrDickSeconded.<p>Seconded.</p>Charlie Baker commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74dcf50970d2013-01-13T03:06:04Z2013-01-13T03:06:04ZCharlie BakerBakho, I can only disagree with one word from your comment: borderline.<p>Bakho, I can only disagree with one word from your comment: borderline.</p>Dan Kervick commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa813c970b2013-01-13T03:02:01Z2013-01-13T03:02:01ZDan KervickIt's political. Obama sees himself as a heroic deficit cutter and budget warrior. He wants to cut spending and raise...<p>It&#39;s political. Obama sees himself as a heroic deficit cutter and budget warrior. He wants to cut spending and raise taxes, and he knows that if he mints the coin, the public will say, &quot;Tell me again why we have to cut spending and raise taxes?&quot;</p>hapa commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74d7396970d2013-01-13T02:02:30Z2013-01-13T02:02:30Zhapayep weird javascript interaction<p>yep weird javascript interaction</p>hapa commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa2970970b2013-01-13T02:01:33Z2013-01-13T02:01:33Zhapa*necessary... jeez that couldn't have autocorrect problem<p>*necessary... jeez that couldn&#39;t have autocorrect problem</p>hapa commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fd9084e970c2013-01-13T01:59:55Z2013-01-13T01:59:55Zhapawe come back to the question of the real hostage situation, where the very serious people refuse nevesary work to...<p>we come back to the question of the real hostage situation, where the very serious people refuse nevesary work to able needful fellow americans.</p>amanasleep commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa1e32970b2013-01-13T01:55:22Z2013-01-13T01:55:22ZamanasleepNo spokesperson for the FED has made an official statement, and nobody has claimed that the FED would not accept...<p>No spokesperson for the FED has made an official statement, and nobody has claimed that the FED would not accept the coin if minted. Tsy has simply issued a statement that in their opinion, and FED&#39;s, the coin cannot be used to get around the debt limit.</p>
<p>Never mind that it would do just that.</p>Bill Jefferys commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fd8f7e5970c2013-01-13T01:49:50Z2013-01-13T01:49:50ZBill JefferysOK so the Treasury won't mint the coin. But the Fed's statement that they won't accept it is contrary to...<p>OK so the Treasury won&#39;t mint the coin. But the Fed&#39;s statement that they won&#39;t accept it is contrary to law, since they MUST accept legal tender, which the coin would be if it were minted.</p>Bill Jefferys commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35aa0c83970b2013-01-13T01:44:19Z2013-01-13T01:44:19ZBill Jefferys"This is why the final deal will include a closing of the coin seigniorage loophole." Only if the debt ceiling...<p>&quot;This is why the final deal will include a closing of the coin seigniorage loophole.&quot;</p>
<p>Only if the debt ceiling is done away with, in return.</p>Mike commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74d0ddf970d2013-01-13T01:12:06Z2013-01-13T01:12:06ZMikeIOW, Republicans are assholes and only become fiscally responsible once a black man take power. I am kidding about a...<p>IOW, Republicans are assholes and only become fiscally responsible once a black man take power.</p>
<p><br />
I am kidding about a black man taking power. Republicans are just assholes and haven&#39;t been fiscally responsible for decades. </p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fd891ba970c2013-01-13T01:03:52Z2013-01-13T01:03:52ZMinIn America, the early 18th century, when most British colonies had their own fiat currencies, or "colonial scrip", as Benjamin...<p>In America, the early 18th century, when most British colonies had their own fiat currencies, or &quot;colonial scrip&quot;, as Benjamin Franklin called them. That money was a source of prosperity, but it also disadvantaged creditors in England. Finally Parliament said that it could not be made legal tender, so that the creditors did not have to accept it. That was among the laws that led up to the Revolution.</p>amanasleep commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fd88dec970c2013-01-13T01:01:51Z2013-01-13T01:01:51ZamanasleepThis is why the final deal will include a closing of the coin seigniorage loophole. The elites have finally figured...<p>This is why the final deal will include a closing of the coin seigniorage loophole. The elites have finally figured out that the entire public perception of our unequal system is on the line here. Of course, like splitting the atom, this concept, once understood cannot be unlearned so it is only a matter of time before it comes up again.</p>Xylix commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a9a2fa970b2013-01-13T00:56:50Z2013-01-13T00:56:50ZXylixOops, should have been a reply to bakho<p>Oops, should have been a reply to bakho</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a9a26a970b2013-01-13T00:56:29Z2013-01-13T00:56:29ZMinHear, hear!<p>Hear, hear!</p>Xylix commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017d3fd881cb970c2013-01-13T00:56:11Z2013-01-13T00:56:11ZXylix[["If we view money as claims on future goods and services, then we can see what our wealthy overlords are...<p>[[&quot;If we view money as claims on future goods and services, then we can see what our wealthy overlords are up to. They simply want to maximize their share of the claims on future goods and services. They maximize these claims by keeping their own taxes low an keeping the flow of goods and services to other people as low as possible.&quot;]]</p>
<p>I disagree. If the intent was to maximise goods and services then the rationale action, in a period of low interest rates, would be to make massive purchases. If this were occurring, there would be no aggregate demand problem.</p>
<p>My alternative hypothesis is that wealth, to the rich, is proof of worth. It is akin to a high score. To have it fall is implies they have become a lesser person and is thus, deeply shameful.</p>
<p>As such, they&#39;ll do anything in their power to rig the system in a way so that the number only increases (and preferably increases faster than that of their peers). It also explain why they take tax increases and wealth transfers so personally. They see it as stealing their worth and giving it to what are by definition undeserving thieves.</p>Min commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74ce739970d2013-01-13T00:54:29Z2013-01-13T00:54:29ZMinTim Duy: "Ultimately, I don't believe deficit spending should be directly monetized as I believe that Paul Krugman is correct...<p>Tim Duy: &quot;Ultimately, I don&#39;t believe deficit spending should be directly monetized as I believe that Paul Krugman is correct - at some point in the future, the US economy will hopefully exit the zero bound, and at that point cash and government debt will not longer be perfect substitutes.&quot;</p>
<p>So what? What is the optimal amount of currency in an economy? Arguably, right now we do not have enough. Suppose that we increase the amount of currency so that we are still on the zero bound, but at the threshold of increasing inflation. (Arguably, that amount is more than one trillion dollars, but we do not have to increase the currency in one lump sum. We could do it on a monthly basis, some billions at a time.) Suppose that then the economy grows, taking us away from the <br />
zero bound. Is there any reason to believe that at that point we have too much currency? Is there any reason to believe that if later the economy shrinks, we will not be glad to have that much currency as a cushion against deflationary pressures?</p>
<p>Remember the depression of 1837? Andrew Jackson eliminated the national debt (almost, anyway) in 1835, draining currency from the economy. The money supply actually increased as private banks issued notes that supported a land bubble. When that bubble burst, that money disappeared and the depression ensued. An economy can absorb currency, perhaps by means of inflation, but too little currency is a harder problem to solve.</p>bakho commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a95c0b970b2013-01-13T00:22:32Z2013-01-13T00:22:32ZbakhoIf we view money as claims on future goods and services, then we can see what our wealthy overlords are...<p>If we view money as claims on future goods and services, then we can see what our wealthy overlords are up to. They simply want to maximize their share of the claims on future goods and services. They maximize these claims by keeping their own taxes low an keeping the flow of goods and services to other people as low as possible. </p>
<p>The argument is not about the debt at all. The argument is maintaining the unequal and unfair share of the economic output for the wealthiest individuals. For our ruling elites, deficits are fine as long as they are created by tax cuts for the wealthiest. Spending on social programs in their minds is always bad. Privatization is good because the wealthy elites can use their wealth to outbid the rabble and purchase better goods and services including education for their legacies and health care for their clan without having to mix with the great unwashed. We are dealing with an elite from the &quot;Me Generation&quot; who are greedy, self important and ruthless borderline sociopaths.</p>Peter K. commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74c7d8f970d2013-01-13T00:00:29Z2013-01-13T00:00:29ZPeter K.http://www.negativeoutlook.blogspot.com"platinum coin seignorage and other such moves re-empower the political branches no doubt appears "disruptive"." When was this lost golden...<p>&quot;platinum coin seignorage and other such moves re-empower the political branches no doubt appears &quot;disruptive&quot;.&quot;</p>
<p>When was this lost golden age when the political branches were empowered to have control over their monetary systems? The 1970s? The pre-Fed era?</p>Darryl FKA Ron commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a8e052970b2013-01-12T23:14:46Z2013-01-12T23:14:46ZDarryl FKA RonQ: What does the hydrologic engineer (or economist) know about that the electrical engineer does not? A: Liquidity. :<p>Q: What does the hydrologic engineer (or economist) know about that the electrical engineer does not?</p>
<p>A: Liquidity.</p>
<p>:&lt;)</p>Dan Kervick commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017ee74c06f4970d2013-01-12T23:00:04Z2013-01-12T23:00:04ZDan KervickWell yes, if you are professionally committed to preserving the impotence of democratic publics over their own monetary systems, and...<p>Well yes, if you are professionally committed to preserving the impotence of democratic publics over their own monetary systems, and to upholding the political independence of central banks - the institutional anchor of inegalitarian neoliberalism for the past three decades - and if you think macroeconomic policy should consist mainly in the swapping around of financial assets among those fortunate enough to own significant financial assets - that is, the rich - then yes, platinum coin seignorage and other such moves to re-empower the political branches no doubt appears &quot;disruptive&quot;.</p>Darryl FKA Ron commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a8b9ec970b2013-01-12T22:58:51Z2013-01-12T22:58:51ZDarryl FKA RonYeah, I get it now. It's kind o' like US trade deficits getting forged into foreign currency reserves in the...<p>Yeah, I get it now. It&#39;s kind o&#39; like US trade deficits getting forged into foreign currency reserves in the form of Treasury securities in order for our major trading partners to keep their currencies under-valued in FOREX relative to the US dollar. Gee, I always thought the Triffin Dilemna solution to the Bretton Woods agreement was worked out by some crazy economist, but from what you say it must have been an engineer.</p>Darryl FKA Ron commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a895ff970b2013-01-12T22:40:29Z2013-01-12T22:40:29ZDarryl FKA RonThe success of a platinum coin would fundamentally alter the conventional wisdom about the proper separation of fiscal and monetary...<p>The success of a platinum coin would fundamentally alter the conventional wisdom about the proper separation of fiscal and monetary policy and the need to control the debt immediately. </p>
<p>[Great wrap up. Not so sure about the inflation argument with Greg lp, but a bit of core wage inflation would not kill us. There is both public and private debt to dillute and still a FOREX gap with some of our trading partners that keeps us from balancing trade.</p>
<p>The craziest thing for me though was being the casual lay reader I had gotten my Tims crossed and was reading Duy expecting Taylor and thought that I had entered an alternate reality.]</p>
<p>:&lt;)</p>Xylix commented on 'Fed Watch: On The Disruptiveness of the Platinum Coin 'tag:typepad.com,2003:6a00d83451b33869e2017c35a8930b970b2013-01-12T22:39:02Z2013-01-12T22:39:02ZXylix[["If there is no difference between cash and Treasury bonds, why should we issue bonds at all? Why not simply...<p>[[&quot;If there is no difference between cash and Treasury bonds, why should we issue bonds at all? Why not simply issue cash? In other words, at the zero bound, what is the argument against monetizing deficit spending?&quot;]]</p>
<p>Because only a fool conjoins two abstracted modules?</p>
<p>No, seriously, this is a common engineering mistake. Having the nation issue bonds allows an economic component to be separated into distinct units: the public financing system and the monetary system. Because these units are separate they can fail (and be repaired) individually.</p>
<p>For instance, a bond issuing government that faces a currency collapse can merely issue bonds in a different currency.</p>
<p>Visa versa, a nation facing a public financing crises can maintain a stable currency and a reasonably functional economy while the government gets its act together.</p>
<p>However, if you conjoin the two systems they /WILL/ fail as a single unit. That makes the system twice as fragile and the consequences of failure twice as severe (generously assuming no self feeding multiplier effects...). It is bad design.</p>